IMC Plan for JK Tyre Industry

IMC Plan for JK tyre Industrytire Industry in IndiaIntroductionTyre (or tyre in British English) is a circinate covering that fits most a wheel to protect it and enable better vehicle performance by providing a flexible cushion that absorbs shock magical spell keeping the wheel in close contact with the ground. The word itself is derived from the word attire, referring to the dressing of the wheel.The fundamental materials of modern tires argon rubber and fabric along with opposite compound chemicals. Their constructive attain-up consists of the tread and the body. The tread provides traction while the body ensures support. Before rubber was invented, the freshman versions of tires were simply bands of metal that fit around wooden wheels in order to prevent wear and tear. The most recent and popular type of tire is pneumatic, pertaining to a fitted rubber found ring that is apply as an inflatable cushion and gener alone(prenominal)y filled with compressed air. Pneumatic ti res are used on many types of vehicles, such as bicycles, motorcycles, cars, trucks, earthmovers, and aircraft. technology times in the Indian tyre industry has witnessed a fair amount of expertise and versatility to absorb, adapt and modify international engine room to suit Indian conditions. This is reflected in the swift technology progression from cotton (reinforcement) carcass to gamey-performance radial tyres in a span of four decades. Globalization has led to the linking of the economies of all the nations and on that pointfore major(ip) Indian players in the tyre industry are pursuing global strategies to enhance their competitiveness in world commercializes. The present section much often than not undertakes an overview of the Indian tyre industry through an examination of its suppuration trends with respect to drudgery, exports and acquisition of technological capabilities.TYRE INDUSTRY SCENARIOIndian Tyre Industry flock be globally competitive on a level p laying field Robust growth in the economic activity in versatile sectors of the economy as well as in the Surface Trans- port sector and re risinged coerce in the infrastructural spends continued to be growth drivers for the Tyre Industry. The reduction in excise duty from 24% to 16% was a welcome move, The completion of Golden Quadri- lateral and North- South and East-West corridor projects will further elevate the Automobile sector. This augurs well for the Indian tyre industry. mend the demand continues to be buoyant, rising input cost in general and petro-based raw materials in fussy is a matter of concern. During the year, the Tyre Industry faced pressure on margins on account of imbalances in the cost emergences and tyre prices.There are epoch-making deficiencies in the infrastructure and its cost thereof vis-a-vis the global unrivalled thus putting the Indian Industry in a disadvantageous jell. While the reduction in the import tariffs is a step in right direction, it needs to be calibrated with the development of infrastructure in the country.Key Featuresthere are 40 listed companies in the tyre sector in India.Major players are MRF, JK Tyres, and Apollo Tyres CEAT, which account for 63 per cent of the organized tyre market. The other primaeval players include Modi Rubber, Kesoram Industries and Goodyear India, with 11 per cent, 7 per cent and 6 per cent allocate respectively. Dunlop, Falcon, Tyre Corporation of India Limited (TCIL), TVS-Srichakra, Metro Tyres and Balkrishna Tyres are whatever of the other operative players in the industry.While the tyre industry is largely dominated by the organized sector, the unorganized sector is pre plethoric with respect to bicycle tyres.The industry is a major consumer of the house servant rubber market. Natural rubber constitutes 80% while synthetic rubber constitutes only 20% of the material content in Indian tyres. Interestingly, world-wide, the proportion of natural to synthetic rubber in tyres is 3070The sector is raw-material intensive, with raw material accounting for 70% of the gibe costs of reapingionTotal production s in tonnage 11.35 lakh MT total production of tyres in all categories 811 lakh (2007-08)Current level of radialization includes 95% for all passenger car tyres, 12% for light commercial vehicles and 3% for heavy vehicles (truck and bus)Restrictions were placed on import of used /retreaded tyres since April 2006Import of mod tyres tubes is freely allowed, except for radial tyres in the truck/bus segment which has been placed in the restricted list since November 2008Total value of tyre exports form India is well-nigh Rs 3000 crore (2007-08)The major factors affecting the demand for tyres include the level of industrial activity, availability and cost of credit, transportation volumes and network of roads, execution of vehicle loading rules, radialization, retreading and exports.The tyre technology upgradation is an extremely difficult process, brea k a elementicularly in the Indian scenario, repayable to several factors. First, since tyre technology encompasses various disciplines such as polymer, chemical, steel etc. compromises ferment to be made in the upgradation of technology because of a) the conflict and complimentarity inherent in these disciplines, b) the usage pattern of the tyres and c) the cost factor. Further, a tyres performance could be affected due to factors such as the weather, loading pattern etc. Despite these bottlenecks technology upgradation in Indian tyre industry during the last few decades has been significant. This has been possible to some extent due to government approvals of collaborations with MNCs in this sector. The emphasis given by Indian tyre companies to applied research, the setting up of well-equipped in house RD centres by large tyre companies, manned by experts and experienced professionals have also helped in technology upgradation. Indian tyre technology has exhibited versatility i n maintaining inflow of technology through foreign collaborations and tailoring the same to Indian needs.AutomationThe production system in the Indian tyre industry has been tralatitiously very dig intensive. The automation of manufacturing processes has increased gradually, which has slashed the size of the workforce to a considerable degree and has effected a alternate in its composition. The degree of automation has been great in the area of radial technology, while cross ply technology is still labour intensive. The firms have been resorting to automation in order to tackle problems colligate to labour unionization and indiscipline in the sector. The rationale provided by the firms for the increasing drive towards automation of the manufacturing facilities has been that high type and uniformity of the final product commonly cannot be guaranteed with a labour intensive process. (Iyer Upadhyay 2008).New Policy InitiativesThe tyre industry in India has had to grapple with r aw material price volatility, rupee cargo deck and cheap Chinese imports. In this connection, some of the recent inaugurals by the government to facilitate the growth of the sector includeNo WTO bound rates for Tyres and Tubes No restrictions on the import of all raw materials required for tyre manufacture except carbon black, which has been placed in the restricted list Increasing thrust on development of road infrastructureThe Marketing Communications MixA companys total merchandise communication theory mix, or onward motion mix, consists of the detail coalesce of advertising, personal selling, sales progression, and public dealing tools that the company uses to pursue its advertising and marketing objectives. The five major types of promotion areAdvertising Any compensable form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.Personal selling Personal presentation by the firms sales force to make sales and build node rela tionships.Sales promotion Short-term incentives to encourage the purchase or sale of a product or service.Public relations Building good relations with the companys publics by obtain- ing favourable publicity, building up a good corporate image, and handling or heading off reproachful rumours, stories, and events.Direct marketing Direct communications with carefully targeted individualconsumers to obtain an immediate responsethe use of mail, telephone, fax, e-mail, and other non-personal tools to communicate directly with specific consumers or to quest a direct response.Each type of promotion has its own tools. Advertising includes print, broadcast, outdoor, and other forms. Personal selling includes sales presentations, tradeshows, and incentive programs. Sales promotion includes point-of-purchase displays, premiums, discounts, coupons, curio advertising, and demonstrations.Direct marketing includes catalogues, telemarketing, fax transmissions, and the Internet. Thanks to techno logical breakthroughs, marketers can now communicate through traditional media (newspapers, radio, telephone, and television), as well as its newer forms (fax machines, cellular phones, pagers, and computers). These new technologies have encouraged more(prenominal) companies to move from mass communication to more targeted communication and one-on-one dialogue. At the same time, communication goes beyond these specific promotion tools. The products design, its price, the shape and colour of its package, and the stores that sell itall communicate something to buyers. Thus, although the promotion mix is the companys primary communication activity, the entire marketing mix promotion and product, price, and place essential be coordinated for greatest.Over the past years, tyre companies around the world perfected the art of mass marketing selling highly standardized products to deal of guests. In the process, they developed effective mass-media advertising techniques to support their mass-marketing strategies. These companies routinely invested millions of dollars in the mass media, scope tens of millions of customers with a angiotensin converting enzyme ad. However, as we move into the twenty- starting time hundred, marketing managers face some new marketing communications realities.The ChangingCommunications EnvironmentThere are two major factors are changing the face of todays marketing communications.1. As mass markets have fragmented, marketers are good lucking away from mass marketing and developing focused marketing programs, designed to build closer relationships with customers in more narrowly defined micromarkets.2. Astimprovements in information technology are speed- ing the social movement toward segmented marketing marketing. Todays information technology helps marketers to keep closer track of customer needsmore information about consumers at the individual and household levels is available than ever before. New technologies also provide new c ommunications avenues for reaching smaller customer segments with more tailored messages.The shift from mass marketing to segmented marketing has had a dramatic impact on marketing communications. meet as mass marketing gave rise to a new generation of mass-media communications, the shift toward one-on-one marketing is spawning a new generation of more alter and highly targeted communications efforts.3 Given this new communications environment, marketers must rethink the roles of various media and promotion mix tools. Mass-media advertising has long dominated the promotion mixes of consumer product companies. However, although television, magazines, and other mass media remain very important, their dominance is now declining. Market fragmentation has resulted in media fragmentation into more focused media that better match todays targeting strategies. For example, in 1975, what were the three major US TV networks (ABC, CBS, and NBC) attracted 82 percent of the 24-hour viewing audi ence. By 1995, that number had dropped to only 35 percent, as cable television and beam broad- casting systems offered advertisers dozens or even hundreds of alternative channels, which reachsmaller, specialized audiences. Its expected to dropeven further, down to 25 percent by the year 2005.The few mass magazines of the mid-twentieth century have been replaced by thousands of special-interest magazines. HMF alone publishes these and more than 20 other magazines reaching 17 various markets and more than 47 million readers, not to mention a wide range of online, broadcast, outdoor, and other media. focused audiences. Beyond these channels, advertisers are making increased use of new, highly targeted media, ranging from video screens on supermarket shopping carts to CD-ROM catalogues and weathervane sites on the Internet.4 More generally, advertising appears to be giving way to other elements of the promotion mix. In the glory days of mass marketing, consumer product companies spen t the lions share of their promotion budgets on mass-media advertising.Now a days, media advertising captures only about 26 percent of total promotion spending.5 The rest goes to various sales promotion activities, which can be focused more effectively on individual consumer and trade segments. Marketers are using a richer variety of focused communication tools in an effort to reach their diverse target markets. In all, companies are doing less broadcasting and more narrow casting.The Need for Integrated Marketing CommunicationsThe shift from mass marketing to targeted marketing, with its corresponding use of a richer mixture of communication channels and promotion tools, poses a problem for marketers. Consumers are being exposed to a greater variety of marketing communications from and about the company from an array of sources. However, customers dont distinguish between message sources the way marketers do. In the consumers mind, advertising messages from different mediasuch as t elevision, magazines, or online sourcesblur into one. Messages drop by the waysideed via different promotional approachessuch as advertising, personal selling, sales promotion, pub- lic relations, or direct marketing all become part of a single message about the company. Conflicting messages from these different sources can result in confused company images and sign positions. All too often, companies discontinue to integrate their various communications channels. The result is a hodgepodge of communications to consumers. Mass advertisements say one thing, a price promotion sends a different signal, a product label creates still another message, company sales literature says something altogether different, and the companys Web site seems out of sync with everything else. The problem is that these communications often come from different company sources. The advertising department or advertising agency plans and mechanisms advertising messages. Sales management develops personal selling communications. another(prenominal) functional specialists are responsible for public relations, sales promotion, direct marketing, online sites, and other forms of marketing communications. Such functional separation has recently become a major problem for many companies and their Internet communications activities, which are often split off into sepa- rate organizational units. These new, forward- run intoing, high-tech functional groups, whether they exist as part of an established organization or as a separate new business operation, commonly are located in separate space, apart from the traditional operation, observes one integrated marketing communications expert.They generally are populated by young, enthusiastic, technologically proficient people with a burning desire to change the world, he adds, but the separation and the lack of cooperation and cohesion can be a disintegrating force in marketing communications In the past, no one person was responsible for thinkin g through the communication roles of the various promotion tools and coordinating the promotion mix. Today, however, many companies are adopting the concept of integrated marketing communications (IMC).The company carefully integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.6 As one marketing executive puts it, IMC builds a strong brand identity in the marketplace by tying together and reinforcing all your images and messages. IMC means that all your corporate messages, positioning and images, and identity are coordinated across all marketing communications venues. It means that your PR materials say the same thing as your direct mail campaign, and your advertising has the same look and feel as your Web site.7 The IMC solution calls for recognizing all contactints at which the customer whitethorn encounter the company, its products, and its brands. Each brand contact will deliver a message, whether good, bad, or indifferent. The company must strive to deliver a consistent and positive message at all contact points. To help implement IMC, some companies appoint a marketing communications director, or marcom manager, who has overall responsibility for the companys communications efforts. Compaq Canada, for example, has a vice-president of integrated marketing communications. IMC produces better communications consistence and greater sales impact. It places the responsibility in someones handswhere none existed beforeto unify the companys image as it is shaped by thousands of company activities. It leads to a total marketing communication strategy aimed at showing how the company and its products can help customers solve their problems.J. K. Industries Ltd.J.K. industries achieved soon enough another milestone and the turnover touched an all time high of Rs. 2,400 crores during the year. Operating Profit for the year was Rs. 132 crores and after providing fo r cost of borrowings, depreciation and taxation, Profit After Tax is Rs. 17 crores as against Rs. 12 crores in the previous year. There has been a sharp increase in input costs in view of increase in the prices of petro-based raw materials. Commensurate increase in the selling prices of tyres could not be made thereby affecting margins. It is a matter of concern that this overhang of increase in input costs continued throughout the year. The bon ton has been trying to meet this difficult situation by adopting various measures including aggressive cost cutting, business process improvements, product re-engineering as also enrichment of product and market mix. The social club has also renegotiated the rates of interest on existing term loans. As a result, interest cost in the current year is expected to witness a significant reduction. Completion of expansion resulting in increased capacities coupled with aforesaid steps, is expected to result in improvement in the margins in comin g year.APPROPRIATIONSThe amount available for appropriation, including surplus from previous years and debenture redemption reserve no longer required, is Rs. 57.81 crores. The Directors send off this to be appropriated as underRs. CroresDebenture Redemption Reserve5.99General Reserve1 .75Dividend7.49Corporate Dividend Tax1.05Surplus carried to Balance Sheet41 .53DIVIDENDCompany are pleased to recommend dividend of 20 % (Rs. 2 per Equity Share) on the Equity Share Capital of Rs. 37.46 crores. The dividend outgo will be Rs. 8.54 crores (inclusive of dividend tax of Rs. 1.05 crores) as against Rs. 8.47 crores (inclusive of dividend tax of Rs. 0.98 crores) in the previous year. The dividend in the hands of the shareholders is tax free.SUSTAINED LEADERSHIP AND GROWTHQuality ExcellenceThe Company continues to play a leading role in the Tyre Industry in India. During the year, production increased to 57.74 lac tyres compared to 55.62 lac tyres achieved last year. All the four Tyre Plants of the Company operated at best capacities producing world class quality tyres.CUSTOMER FIRSTIf is a matter of great pride that your Company has been ranked No.1 in the Tire Customer bliss Index Study conducted by J D fountain Asia Pacific 2005 India. Company acknowledge the support of all its valued customers in attaining the lead position in the Tyre Industry in India. JK Tyre continues to be Indias only Tyre Superbrand. It reinforces our belief of putting the customer first in all our endeavours. truck/BUS RADIAL TYRESProduction GraphDuring the year, your Company achieved yet another milestone and rolled out One Millionth All Steel Truck/ tidy sum stellate Tyre. The Company has produced radial truck/bus tyres of the value of more than Rs.1,000 crores so for and has been exporting the same to several global markets. Your Company continues to produce more than 80% of Indias All Steel Truck/Bus Radial Tyres.The expansion of condenser of Truck/Bus Radials by 50% was completed and has now become operative. This would allow the Company to continue its leadership role in this vital growth area and meet Indias growing demand for Radial Truck Tyres. progressive Promotion and Concept Selling marketing strategy helped the Company to accelerate the use of Truck/Bus Radial Tyres in the country. With renewed thrust on the improvement and enlarging road network and highways, the pace of radialization shall pick up in the years ahead. Increasing number of buses are being fitted with radials and with the increased road movement as a result of better road quality and network, radials will find application on larger number of buses. Plans are well under way to further expand the capacities to meet the demand for accelerated radialization.EXPANSIONIn addition to expansion of the truck radial capacity as mentioned above, the passenger radial capacity expansion by 30% has nearly been completed. The benefits of both these enhanced capacities will be available in the comin g year. To meet the puff in demand for the Companys tyres as also maintaining our leadership in the Tyre Industry, further capacity expansion is planned.Exports GraphEXPORTSYour Company continues to be the lead exporter of tyres from India. During the year, exports increased to Rs. 383 crores. The Company has developed an extensive global marketing net- work and its tyres are sold in 60 countries across 6 continents. JK Tyre is a preferred brand in several leading global markets. This is yet another recognition of the Companys world class quality tyres.HUMAN CAPITALThe Company believes that human resources are key to the success of business. It has been taking several steps to enhance employee skills through training development, empowerment and nurturing talent. In recent years, major initiatives on Competency based Leadership Development and Business Process Re-engineering were taken up which have yielded excellent results.JK TYRE -MARKET LEADERProduction during the year touched a high of 57.74 lac tyres against 55.62 lac tyres last year. All the 4 Tyre Plants of the Company worked at the optimum capacities at high operational efficiency levels, producing world- class quality tyres.During the year, the Company achieved yet another land mark of being ranked No.1 in the Tyre Customer Satisfaction Index Study conducted by J D Power Asia Pacific 2005 India -a distinct customer satisfaction endorsement of your Companys products. This has reinforced our market leadership. It is indeed a matter of great pride and satisfaction that JK Tyre has have the most coveted recognition of Superbrand and now No.1 ranking in the Customer Satisfaction. This, more than amply demonstrates the Companys commitment to its customers and its leadership in the Indian Tyre market. mercantile TYRE SEGEMENTThe segment constitutes Bus, Truck and LCV tyres. Their efforts have been to not only meet customer expectations but also to give the very best in quality and performance driven prod ucts.During the year, Company made new offerings and introduced various tyres, the principal ones being Jet Xtra, Jet Rock and Jet Star for segment specific Bias Truck applications. Nine new tyres were introduced for LCVs for different usage and road conditions.The Company continued to establish great focus on customers through customer contact programmes in LCV tyres and also by partnering the fleet program of Indian Oil Corporation. Training camps were organized to create sense amongst tyre fitters by organizing cut through Tyre Fitter Programmes a first in the industry. AIDS awareness programme was launched amongst Truck Drivers to educate them for prevention and care of this deadly disease.TRUCK RADIALSCompanys initiative of introducing all Steel Truck Radial tyres in India have started yielding results and the roll out of the millionth tyre at the most modern pose at Mysore in July 05 is a testimony to the far sighted vision of your company. Company is not only the No.1 tru ck radial manufacturer, but is a dominant leader in the market with more than 80% market share.New products and sizes of tyres were introduced in the market which received excellent consumer acceptance. JK Tyre Truck/Bus Radial Tyres are gaining increased fitment by Original Equipment Manufacturers.Customers education and participative involvement with end users has taken shape under the Unique Fleet Management Programme. Dedicated violence have been attached to the fleets to enable them to fully realize the benefits of usage of radials. The Tyre Care Center Network along prominent highways continues to provide round the clock service to truck/bus operators. Your Company is able to see the rapidly growing pace of radialisation moving from current levels of approximately 2% to 5% in the immediate future to 10% in next 5 years. Expansion of capacity by 50% will help maintain companys leaderships in domestic market as also service its export to sophisticated markets across the globe.C AR TYRESDuring the year under review, your Company continued its thrust on partnering growth with OEM Customers. Various consumer oriented activities such, as Zip and Sip offer, participation in Indian Oil Extra Rewards programme and Monsoon Protection offer were undertaken to strengthen durance with customers. Product aesthetics, introduction of newer range, addressing product requirement across different types of cars continued to be important focus areas for radial car tyre segment. Various new sizes and patterns such as Vectra and Zephyr for car radials were introduced for the new models launched by the auto manufacturers. Through relentless efforts, the Company achieved Unique Distinction of being ranked No.1 in Customer Satisfaction by JD Power Asia Pacific, a world leader in assessing customer satisfaction in the automotive segment. Expansion in capacity by 30% shall enable the company to increase its participation in replacement as well as OE segments.STEEL WHEELSAt the fo refront of all car consumer-reach programs has been the Steel Wheels retail network as an important Customer Interface touch point. This year, Steel Wheels played a significant role creating awareness on tubeless tyres usage. Over hundred outlets across the country cater thousands of customers with value added services including wheel alignment, wheel balancing and automated tyre modifier apart from providing ready guide on tyre care in a pleasant ambience.ORIGNAL EQUIPMENT MANUFACURERS(OEMS)India is fast emerging as a global automotive hub. The Automotive industry is maturing and New Models being introduced at a rapid pace is a challenge for the tyre industry. It is our privilege to be a major business partner to highly prestigious OEM manufacturers with increased share of Business both in Commercial as well as Passenger categories.It may be recalled that JK Tyre product development group was entrusted with the task of developing tyres for Maruti Udyogs New Generation Global Car. It is heartening that during the year, JK Tyre was listed as a single source vendor for Maruti Swift Car, Mahindra and Mahindra Ltd. selected your Company for supplying specially developed ELANZO tyres for their luxury Scorpio vehicle.OFF THE ROAD TYRE(OTR)Your Company has put renewed thrust on development of OTR Tyre business. Both production and sales increased by various folds in the last four years with JK Tyre OTRs attaining improved market share.Continued thrust on development of new sizes of products has helped the company to emerge as the best in class in the domestic replacement market. motor SPORTSJK Tyre has been successful in promoting motor sports in India during the last more than 10 years and has being pursuing the task of nurturing talented drivers to achieve greater heights for their recognition at various platforms in domestic racing championships as well as international arena Narain Karthikeyan -JK Tyre Prodigy became the first ever Indian Formula- 1 belt along Driver. Karun Chandhok and Armaan Ebrahim became A-l drivers with Armaan becoming a success in Formula BMW Asia. The Company organized 5th depicted object Karting Championship and Racing Championship during the year. The Company also participated in Dubai Endurance Test and now re-entered National Rallying with great elan and success.GLOBAL PRESENCEBeing the largest tyre exporter, your Company accounted for over 30% of total tyre export from India during the year, with export turnover of Rs. 383 crores. It was made possible mainly by the continued thrust on strengthening international network and building JK Tyre brand in the overseas markets. Your Company continues to operate through an extensive distribution network pass on across 60 countries over 6 continents.The company is enhancing outsourcing activities from China for international and for Chinese markets in its own brands. It is a matter of pride that JK Tyre and Vikrant Tyre brands are rated amongst premium brands in high ly quality conscious global bias tyre markets.TECHNOLOGYBeing a pioneer of Radial Technology in India, Company continues its zeal to maintain Technology Leadership. It has established many firsts in the areas of Technology in the past and has further accelerated this pace through extensive in-house Research and Development activity as well as through adoption of latest technology from its collaborator, Continental AG, Germany -the 4th largest Tyre Company in the world.The fact that SWIFT -a new world class model of Suzuki has only JK Tyre as its 100% supplier, is yet another endorsement of Companys leadership in Technology. JK Tyre is the first Indian Company to commercialize V rated (speed rating of 240 kms/hour) Passenger Radial tyres.HASETRI (Hari Shankar Singhania Elastomer Tyre Research Institute),. an independent institute dedicated to Elastomer and Tyre research, promoted by your company is driving companys Technological advancement. HASETRI is a Scientific and Industrial R esearch Organization (SIRO) and besides up- grading the facilities, infrastructure and manpower capabilities, is works jointly with Technology team of the Company to come out with new and advanced products. Towards this endeavour, HASETRI is not only benchmarking technological capabilities, but also collaborating with various National and International academic institutes. The Company has also established a Centre of Excellence for Tyre and Vehicle Mechanics in IIT, Chennai for latest computational system, which is the first such Centre in this field for tyre vehicle dynamics technology. This idea has been well appreciated by Automotive companies as it aims to develop master products for Indian Automobiles.With this strength and Technology Leadership initiatives, customers